Product development is a journey with the ongoing objective of making the most valuable product for your users.
It's important that as a founder or product manager, you continue to make good decisions along the journey to achieve product-market fit.
'Product-market fit' means the company has found the right combination of variables to create a product that fits what the market wants, which makes getting and keeping customers much easier.
This article provides a high-level overview of the product development process with the aim of getting a product-market fit.
Good decisions making
Although a founder may have a good intuition about their customers and what they want if decisions are based on intuition alone, it's likely they'll get it wrong at some point. Humans are not consistently good at making decisions based on assumptions.
Other people in the team will also need to make decisions about product development. It is quite unlikely that any business will have a team that operates off the same core assumptions and intuition, as every person is different.
For these reasons, it's fundamentally important that founders and teams use data and customer feedback to make decisions.
“If you haven’t talked to users and you haven’t looked at data, you don’t get to have an opinion about the product. You can have ideas, but you don’t get to make the call” - Emmett Shear, Co-Founder of TwitchTV.
This resource provides a framework to help founders and product managers approach product development, with a focus on ongoing data collection and feedback loops. It's to help individuals and teams make the best decisions about creating a valuable product for customers and the business.
A framework for approaching product development
The framework is broken down based on answers to the following questions, which are each explained in more detail below:
- What is the core value the business provides?
- How does this transfer to key benefits for customers?
- What are the features of the product that produce these benefits?
- What are the practices and tech that will be used to build, measure and learn from the features?
- What are the metrics that will indicate that the product is valuable enough to users, and;
- How will the financial impact be tracked?
1. Businesses core value
It's important to have a strong foundation for making ongoing decisions about product and business development. New ideas and opportunities will come up all the time, especially if the company is onto a good thing. Although the new shiny things might sound good, often they're distractions from the primary pathway to creating value for the business.
To understand the core drivers, a founder can ask themselves the following questions:
- What are the most valuable outcomes for your customers? Your customers will generally tell you.
- What do you need to make work to have a sustainable business model?
The reason the second question is an important consideration when working out the core value of the product is the need to balance value to customers and value returned to the business. A company can give it's customers all the benefits in the world, but if this doesn't translate to value for the business, it won't be a business for long.
I worked with a freight marketplace platform startup and the most important outcomes for our customers are: (1) a price that's at or below market rates, (2) freight gets picked off and dropped off on time and (3) the customer spends as little time on freight as possible.
For the business model to work, we needed to be able to prove that we could acquire and retain customers who would send freight at an average price that's 10% higher than the average rate we pay the trucks to do the work. This is the unit economics of the business.
Business development is an ongoing journey of understanding more about customers behaviour. It's a process of collecting information to validate assumptions and understand the true reality of the gap the product will fill.
2. The key benefits for customers
How does the core value of the business translate to a set of key benefits that makes customers lives better?
One way to understand and articulate key benefits is by describing what the product users situation used to be vs. what it is now as a result of using the product.
For example, with the freight business, customers used to pay a higher price because of the incumbent's inabilities to optimise capacity allocation. The company developed technology to track trucks so freight can be sent in the most cost-effective way, which enables the company to pass savings on to its customers. One of the core benefits for customers is cost savings.
Whereas benefits describe the outcomes for customers, features describe the functionality that enables the benefits.
The features are what the company is actually building, using the software, hardware, ingredients etc.
A good way to understand and articulate a products core features is by relating them directly back to the key benefits for users.
For example, News Feed is a web-feed feature of Facebook which helps users to quickly and easily view the activities of their friends. This functionality is the primary system through which users are exposed to content posted on the network.
4. Build, Measure, Learn
Once a team has prioritised what needs to be built first, having a feedback loop to help make decisions about ongoing development is important.
The 'build, measure and learn approach' is the basis of the Lean Startup Methodology and provides a framework for product development.
The simplest version of the product should be built first, to see if and how it's used by the customer. This means building the minimum amount of features necessary, to test whether the core value of the product is something customers want and will use.
The only way to know if this is true is to measure their important behaviours and get feedback. Tools that allow you to track user behaviours, such as Hotjar, and on-site, real-time feedback software, such as Intercom or Freshchat are useful for measuring and learning from users.
These learnings are used to inform further product development.
5. Key Metrics
The work done within a business should be optimised towards a set of key metrics that indicates if the product is valuable to users.
Having one key metrics that the business tracks religiously will help to make sure efforts are aligned to the correct goal, and founders keep themselves and their team accountable.
To work out what this one key metric should be, think about the user behaviour that indicates they're getting value. This might be the average number of transactions per customer per year, the average number of logins per month, the number of posts per month or Net Promoter Score, as examples.
Speaking to customers to get direct qualitative feedback is also very valuable, especially in the early stages of product development.
6. Track Revenue
As a business starts to grow its the number of paying users, it pays to keep track of week-on-week and/or your month-on-month revenue, so the team can see their efforts translate into value for the business. This makes the hard slog feel worthwhile.
Developing a functional, valuable product is no easy feat. People often underestimate how hard it is to turn an idea into a piece of technology, or another form of product, that people get enough value from to continue to use.
Remember, it's a noisy world out there. There are lots of other businesses and products competing for customer's attention, and wallet share. Founders need to put significant focus on and effort into making sure they are building something users love.
We hope this guide helps to develop you're thinking in regards to product development.
We do offer software product development services through Mum's Garage if you don't have the capabilities to develop a mobile or web application yourself. Or we can assist you with development strategy through mentorship.